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Double Marginalization Q The 2 Suppose that the market demand for a product is given by P = 240 marginal cost of manufacturing the product is $30, the marginal cost of selling the good is $10

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Double Marginalization Q The 2 Suppose that the market demand for a product is given by P = 240 marginal cost of manufacturing the product is $30, the marginal cost of selling the good is $10. A. If there is a single firm that produces the product and sells the product, what price will be set, what profits will it earn? B. Suppose that there are instead two firms, a manufacturer and a retailer. The Manufacturer set a price Prs that it sells the good to the retailer. The retailer then sets a price to sell to consumers. Set-up the maximization problem for the retailer. Solve this problem and write the solution as Pn(Q). Now using Pm(Q), set-up and solve the manufacturing firms maximization problem. What price does it set? What are the profits for each firm. 11.